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Operating income % Total assets (investment base) Return on investment Residual Income (8% cost of capital) A. Determine the operating Income (loss) Current Year Operating income (loss) $ B. Determine the operating income (loss) Current Year Operating income (loss) Return on investment Unsuccessful ✓ Residual income $ % % $4,500 ? ? ? (dollars) for each year. If required round final answers to two decimal places. Prior Year c. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places. Current Year Prior Year ? $1,400 (percentage) for each year. If required round final answers to two decimal places. Prior Year % % D. Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Current Year Prior Year

Operating income % Total assets (investment base) Return on investment Residual Income (8% cost of capital) A. Determine the operating Income (loss) Current Year Operating income (loss) $ B. Determine the operating income (loss) Current Year Operating income (loss) Return on investment Unsuccessful ✓ Residual income $ % % $4,500 ? ? ? (dollars) for each year. If required round final answers to two decimal places. Prior Year c. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places. Current Year Prior Year ? $1,400 (percentage) for each year. If required round final answers to two decimal places. Prior Year % % D. Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Current Year Prior Year

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Operating income % Total assets (investment base) Return on investment Residual Income (8% cost of capital) A. Determine the operating Income (loss) Current Year Operating income (loss) $ B. Determine the operating income (loss) Current Year Operating income (loss) Return on investment Unsuccessful ✓ Residual income $ % % $4,500 ? ? ? (dollars) for each year. If required round final answers to two decimal places. Prior Year c. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places. Current Year Prior Year ? $1,400 (percentage) for each year. If required round final answers to two decimal places. Prior Year % % D. Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Current Year Prior Year
Transcribed Image Text:Operating income % Total assets (investment base) Return on investment Residual Income (8% cost of capital) A. Determine the operating Income (loss) Current Year Operating income (loss) $ B. Determine the operating income (loss) Current Year Operating income (loss) Return on investment Unsuccessful ✓ Residual income $ % % $4,500 ? ? ? (dollars) for each year. If required round final answers to two decimal places. Prior Year c. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places. Current Year Prior Year ? $1,400 (percentage) for each year. If required round final answers to two decimal places. Prior Year % % D. Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar. For those boxes in which you must enter subtractive or negative numbers use a minus sign. Current Year Prior Year
The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year. FORKLIFT MATERIAL HANDLING Income statement Comparison (Amounts in thousands) Sales Cost of goods sold Gross profit Expenses: Wages Utilities Repairs Selling Total Expenses Operating income Operating income % Total assets (investment base) Return on investment Residual income (8% cost of capital) Current Year $33,750 21,937.5 $11,812.5 $8,750 675 168 507 $10,100 ? ? $4,500 ? ? Prior Year $24,700 16,796 $7,904 $6,189 200 325 300 $7,014 ? ? $1,400 ? ?
Transcribed Image Text:The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year. FORKLIFT MATERIAL HANDLING Income statement Comparison (Amounts in thousands) Sales Cost of goods sold Gross profit Expenses: Wages Utilities Repairs Selling Total Expenses Operating income Operating income % Total assets (investment base) Return on investment Residual income (8% cost of capital) Current Year $33,750 21,937.5 $11,812.5 $8,750 675 168 507 $10,100 ? ? $4,500 ? ? Prior Year $24,700 16,796 $7,904 $6,189 200 325 300 $7,014 ? ? $1,400 ? ?
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